[ Nippon Keidanren ] [ Policy ]
Outline of Proposal on Pension System Reform for 2004
September 10, 2003
Nippon Keidanren
(Japan Business Federation)
I. The Pension System: Problems and the Path to Solution
The Trinity Reform and Expansion of Private Pension Systems
-
- [Problems]
- Increased burden on working generations
- Widening of inequality gap between generations
- Hollowing out of the National Pension Fund system
- [Path to Solution]
-
Public pensions
- Restrict increases in premium rates
- Limit benefits
- Convert to basic pension based on indirect taxation
Private pensions
- Expand support for self-help
- [Objectives]
- Restoration of confidence in the pension system
- Elimination of concern about the sustainability of the pension system
- Preservation/boosting of socioeconomic activity
II. Major Necessary Reforms
(1) Public Pension = Promotion of Trinity Reform
- Premium burden --> Control of rate increases and implementation of fixed rate system
- To greatest possible extent, fix employees' pension premiums at a level that does not exceed the current 13.58% (15% ceiling, increased incrementally)
- Condense employees' pension reserve as much as possible in time for the peak of the population's aging
- Limit benefits --> Suppress to 20% level over a set period
- [Preconditions]
- Abolition of the guarantee of amounts calculated with previous formula established when the benefit multiplying factor was reduced by 5% in the 1999 reform
- Lower benefit amounts in conjunction with the decline in the consumer price index (-1.7%)
- Based on the income and expenditures of the elderly, restrict benefits for primarily high-income earners (consideration given to low-income earners)
- Early implementation of systematic scheme for limiting benefits, followed by introduction of sliding benefit system based on economic and population changes (for both current and future benefit recipients )
Note: Retain the existing 2-tier system of basic pension and income-proportional pension
- Reform basic pension system --> In the future, convert to basic pension based on indirect taxation (application of consumption tax revenues)
[Reforms for the immediate future]
- Increase the government's contribution to the basic pension in 2004 (definitely raise from 1/3 to 1/2)
- Funding source: General abolition of public pension exemptions, and application of consumption tax revenues
- More stringent collection of National Pension Fund premiums, and separation of two tiers of employees' pension premiums
(2) Private Pensions --> Expansion of tax-related support measures
- Immediate abolition of the special corporate tax
- Raising of the contribution ceiling on defined-contribution pensions
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